S&V Weekly Newsletter Vol.4 No.31, August 6, 2018

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The strike: 'Things fall apart; the centre cannot hold'

The strike over wages called by the National Union of Leather Workers (NULAW) and the SA Clothing and Textile Workers Union (SACTWU) in the footwear section of the National Bargaining Council has now been running for 4 weeks, the longest strike in the industry since the 1990s.
It's increasingly fragmented, with workers on one side and manufacturers on the other breaking ranks with their colleagues.
On August 1, SACTWU sent a letter to manufacturers offering to suspend the strike at individual plants in exchange for individual manufacturers agreeing to pay a 7.5% wage increase (NULAW's demand) PLUS a variety of other options adding a further 0.5% (i.e. 8%, SACTWU's demand). SACTWU claims this is not undermining collective bargaining, but it clearly is. NULAW is reportedly verbally offering a similar deal - for 7.5% - but it did not respond to a request for comment.
On July 24, the Southern African Footwear & Leather Industries Association (SAFLIA) raised its offer from 6.25% to 7%, but has refused to increase further.

SAFLIA's position: By Jirka Vymetal, director
The strike is the last thing that SAFLIA hoped for as it causes hardship on both sides and in the end nobody is a winner.
Most footwear manufacturers are working short time due to depressed sales and this is reflected in the annual (footwear) manufacturing statistics which shows that the total local manufacturing in the 2017 calendar year reduced by 1.7%. This reduction in 2017 is the first year since 2011 that we had negative production in the footwear industry. All indications are that the 2018 production numbers will reduce further which is placing massive strain on the industry as a whole.
Our footwear sector has always been very accommodating when it comes to increases. In fact since 2003 we have always given above the annualised CPI inflation percentage, on average the excess is in the vicinity of 2% every year. During tough economic trading conditions, this is not sustainable, therefore we consider the 7% offered this year to be fair. It is still above inflation for this year. Our sector pays the highest wage rates compared to other associated sectors. For example an entry level general worker in the Footwear sector earns R1,533.06 per week or the equivalent of R6,638.15 per month, Tanning sector R1,212.54 per week (R5,250.30 per month) and General Goods & handbags R1,031.57 per week (R4,466.70 per month).
So even if our wage percentage offer (for this year) is a little less than the other sectors, the Rand value is still higher.
Hence the opinion that it is a fair offer.
What is of great concern is the level of violence, intimidation and attempted arson at certain manufacturers this time round and this we find unacceptable. We made a special request to the unions to take into consideration section 69 of the LRA. This seems to have been ignored.

SACTWU's position: By André Kriel, general secretary
I can only reply on behalf of SACTWU, and do so as follows:
Our letter to individual manufacturers is important, given the current status of the footwear sector national wage strike. In summary, the context is as follows:
The Commission for Conciliation, Mediation & Arbitration (CCMA) had offered assistance to the disputing parties, in terms of Section 150 of the Labour Relations Act, in a good faith attempt to help find a resolution of the strike. All parties to the dispute had accepted the CCMA intervention. Inherent in such acceptance, is a willingness to find a compromise to settle the strike. All parties, including the SAFLIA representatives, confirmed this to the presiding CCMA Commissioner, Mr Berlin Nyager, at the commencement of the CCMA intervention meeting, held on Monday 30 July 2018, at the leather industry bargaining council offices in Durban. Regrettably, the SAFLIA chief representative advised that he had to leave the meeting by 11h30, but confirmed that the remaining SAFLIA members would be able to proceed with the meeting. He duly left at 11h30.
SACTWU then made its compromise proposals and there was of course the consequential interactions with the other parties to the dispute (NULAW and SAFLIA), and to and fro interactions.
To our horror, right at the end of the day, the Commissioner reported to us that the remaining SAFLIA employer representatives had advised that they had no mandate to negotiate a settlement (not even a recommended one), and that their mandate was to stick to the settlement offer which the SAFLIA CEO’s had voted on at their meeting held as far back as 24th July 2018, and which we had advised in writing on the same day, was not acceptable to our members.
We then reported the developments of the CCMA-brokered conciliation meeting to our members. Our members regarded the development as extreme bad faith, in that it would have been better had SAFLIA advised the CCMA that it declined the CCMA intervention offer because it was not prepared to revise its previous offer tabled to the unions on 24 July 2018. It wold have been also better, had SAFLIA advised us so, at the start of the CCMA facilitation on 30 July 2018, instead of confirming that it was prepared to negotiate a settlement and right at the end of the day confirming that they had no mandate to move from the employer offer which had been tabled to the unions on 24 July 2018.
It is in this context that our members resolved that SACTWU should table its revised compromise settlement options offer made at the CCMA meeting directly to individual manufacturers. We are of the view that it is unfair to let individual manufacturers who are prepared to accept our compromise offer, to continue to suffer the damaging consequences of the strike. Hence our letter offers a suspension of the strike to those manufacturers who are prepared to accept our compromise offer, whilst still pursuing a national agreement.
Finally, SACTWU does not condone those workers who wish to return to work, to be illegally prevented from doing so. We do however have a legal right to take steps to try and dissuade them from doing so.

Comments from various manufacturers
Caprini Footwear in Durban has been "almost 100%" back at work for more than a week, MD Sanjay Pattundeen said. He said the only people not back were "regular absentees". Caprini has not signed SACTWU's letter, nor reached any internal settlement. "I just sent a message to the guys saying that we would pay 7% or 7.5%, whichever was agreed, and they all pitched up." He said there had been stone throwing and other acts of intimidation earlier in the strike. Referring to wage negotiations, he said the industry needed to "do things differently going forward".
At Corrida Shoes in Pietermaritzburg, "90% of the staff arrived for work on Thursday", said director Adrian Maree. "Then the shop stewards started walking among them, telling them it wasn't going to happen. So we're still on strike. I feel sorry for the workers, but everyone involved has lost. Something needs to change - the bargaining system is failing us all."
Corvari Footwear in Pinetown has been back at work for 2 weeks, proprietor Jeff Bodill said. "I gave a verbal undertaking to pay 7.5%. I may have been misled, and I'm concerned that I've got myself into a situation. This strike has been a very bad thing."
At Elefante in Durban, member Sagren Naidoo said the factory was not working and "wouldn't work for another month or so" because it had stocks built up.
"We treat each day as it comes," said Rodney Naidoo, member of Nasron Footwear Manufacturers in Durban. "Some days are quiet and we call in the troops and do what we can. Other days there's a mob, and you leave as quickly as you can. Our area has been particularly volatile - they come carrying sjamboks, knives and rocks. This is no peaceful demonstration." He said woman workers, in particular, had been too frightened to come to work. Earlier in the strike, a number of manufacturers, including Nasron, hired security guards to enable workers who wanted to go to work to get through, "but when the mobs got to a couple of hundred strong, it was pointless".
Prisaan Footwear in Pinetown had signed its own internal agreement with NULAW for 7.5%, financial manager Joash Govender said, and returned to work last week.
"The strike hasn't been an issue for us," said Strayz member Keith Lyons in Pinetown. "I told the guys they would get whatever the settlement figure is, and there was no point in striking. We're away from the main shoemaking areas, so we don't get the spillover effect from other factories."
A Durban manufacturer supplying a budget chain, speaking on condition of anonymity, said he had signed SACTWU's letter because he didn't believe the chain would accept late deliveries, and the strike had "set us back badly". He said his factory went back into production on Tuesday last week.

Comments from component suppliers
Component Cluster chairman and Apeco MD Mark Gibbings said the strike was "a complete disaster for everyone involved". "The state of the industry is a reflection of the state of the country as a whole, and it can't afford this. As an industry, we have to find a different way of doing things."
Greenaways (Natal) member Garth Ribbink said suppliers were battling: "The factories have had no production for 4 weeks. Therefore no invoicing, so no income, therefore it's not easy to meet payments as the first 5/6 months have not been good, so no capital build up."

Observations
It seems clear that the unions miscalculated to a surprising degree in calling this strike. They have the resources to know how bad the economy is. If the country as a whole isn't technically in a recession, the footwear industry is, and it's a strange decision to strike during a recession.
A number of observers on the manufacturers' side have criticised the current bargaining council model for this year's impasse. The irony is that the same model has often been criticised in the past, by factories specialising in low-priced footwear, for agreeing to wage increases they felt were too high.
More pertinent for now is whether the manufacturing value chain and workers will make up what they've lost.
The summer season - what the entire fashion industry depends on - is around the corner.

Dodo's acquires Franco Ceccato

From Ralph Dodo, Dodo's ShoesJohannesburg (SA) – Dodo’s Shoes (Pty) Ltd is delighted to announce the acquisition of the businesses of Franco Ceccato (Pty) Ltd and Queue Shoes.
We are equally delighted to announce that the Managing Director and previous owner of the above businesses, Steve Miller, will be joining the Dodo’s main board with special emphasis on merchandise.
Steve and his buying team, including Sue Coelho and Sanet Niehaus, will be joining Daniel Dodo and his buying team making the enlarged group's buying team formidable.
The Franco Ceccato and Queue stores operate nationally throughout South Africa and Namibia. The combined mix of these stores as well as the Dodo’s stores give the enlarged chain a key strategic position in South African, Namibia, Botswana, Swaziland and Lesotho footwear market.
The administration parts of Franco/Queue will move to Johannesburg with selected other aspects still being handled in Cape Town.
The new chain with the store count of nearly 200 stores intends to grow aggressively in the forthcoming years.

Equator moves

New Germany (SA) – Equator Accessories has moved to 3 800 m² premises at Unit 8, Pine Industrial Park, 16 Pineside Road New Germany, after 10 years at the previous address in Pinetown.
"We had thought we'd need to move by 2019/2020, but outgrew our premises in early 2016," MD Leon Buhr said. "It took some time to find suitable new premises and to plan the factory installation and the move. We moved the factory, the warehouse and the design centre over three successive weekends and lost no down time - a testament to our staff's incredible planning and hard work. We're grateful for our strong growth over the past few years."
The phone number and postal address remain unchanged: +27 (0)31 702 1469, PO Box 488, New Germany 3620.

Lanxess/Leather Systems SA change

Port Elizabeth (SA) – After several years spent with Lanxess, effective August 1, Björn Jönsson has joined its distributor in South Africa, Leather Systems SA (LSSA).
He has joined LSSA as leather technician to continue the technical sales support to Lanxess's leather business in Southern and East Africa. He will remain responsible for application trials, article development and technical promotion of the full range of Lanxess leather products in the region. Moreover he will keep on supporting Lanxess direct business to the major automotive leather groups based in South Africa.
His new email address is: bjorn@leathersystems.co.za

They Said It

"Please be advised Mark is only returning to the office tomorrow.I know, Karen. I'm trying to get to the top of his to-do pile.
Do you like mining? That bad, huh?
No, it's that you’re so far at the bottom of the big pile that you’re underground "
- Correspondence between the much put-upon editor and Apeco MD Mark Gibbing's PA, Karen Bowman. In her case, I think PA stands for 'particularly abusive'.

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ABSA Agri Trends 27/07: Hides & skins prices

The average hide price over the past week was R5.85/kg green. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies. The average price for Dorper skins was R40.56, and for Merino skins was R96.83.

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